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A $4.5 million whistleblower payout issued last week by the Securities and Exchange Commission marked an important — and perhaps fleeting — milestone for the agency, the Wall Street Journal reported. The award was the first granted to a claimant under a provision of whistleblower rules designed to incentivize internal reporting by tipsters who also report to the SEC within 120 days. But a recent U.S. Supreme Court decision that raised questions about protections for whistleblowers weakens the regulator’s policy, according to lawyers who fear tipsters may now be more reluctant to report information to company compliance officers. If a tipster chooses to report alleged wrongdoing to the SEC within 120 days of reporting it to a company, the policy says, the tipster’s case for an award will benefit from information the company uncovers in internal probes resulting from the tip. That is assuming the company provides the information to the SEC. The provision says that reporting to the company isn’t required, but it encourages internal reporting first in an effort to allow a company to police itself and reduce the burden on government investigators, according to the SEC discussion of the rule before its implementation in 2011. Whistleblowers are entitled to between 10 and 30 percent of monetary penalties when their tips result in a successful enforcement action and when the monetary penalties are more than $1 million. A tipster’s participation with company compliance professionals is one factor in how much a tipster might be rewarded, the policy says.

The U.S. Securities and Exchange Commission (SEC) has taken action against what it alleges is a $30 million cryptocurrency scam based around supposed diamond investment, CoinDesk.com reported. The SEC alleged that defendant Jose Angel Aman operated a purported crypto business called Argyle Coin as a Ponzi scheme, using investments from new recruits to pay returns to previous investors. According to the SEC complaint, Aman is said to have fleeced over 300 investors since May 2014 by selling unregistered securities in two other firms he owns: Natural Diamonds Investment Co. (Natural Diamonds) and Eagle Financial Diamond Group Inc. He “falsely promised” investors that the firms would invest in whole diamonds to cut down and sell for substantial profits, the SEC said. He was allegedly assisted in the scheme by Harold Seigel and Jonathan H. Seigel, who also had interest in the two firms.

The U.S. Securities and Exchange Commission is investigating the Houston oil and gas company Alta Mesa Resources for potential fraud amid admitted failures in its financial reporting, the Houston Chronicle reported. The one-year-old company, put together by the former chief executive of Anadarko Petroleum with the backing of private equity money, was already struggling to survive following a $3.1 billion write-down of its assets attributed to undisclosed flaws in its financial accounting. The company has declined to elaborate on the nature of its internal financial errors. The company has laid off roughly one-third of its 200 employees this year. With its stock trading at 18 cents a share as of Friday, the company’s market value has plunged to just over $30 million from more than $3 billion early last year. Alta Mesa said is considering a potential bankruptcy filing in the months ahead as it deals with defaults on loan agreements and delisting warnings from the Nasdaq stock exchange, Alta Mesa acknowledged Friday a belated annual report filing with the SEC. Alta Mesa has yet to report its first quarter earnings, but said in its filing that it estimates a $13 million loss for the first three months of the years.

The Securities and Exchange Commission dealt a fresh blow to stock exchanges’ lucrative business of selling data and high-speed connections, the Wall Street Journal reported. New guidelines from the regulator, released yesterday, will make it tougher for exchanges to boost fees for such services by requiring them to include detailed disclosures each time they seek to adjust a fee. The SEC last year rejected two data-fee increases imposed by the New York Stock Exchange and Nasdaq Inc., prompting them to challenge the regulator’s decision in a federal appeals court.

The Securities and Exchange Commission over the five years ending in 2018 took in 55 percent of the $20 billion in enforcement fines set through settlements or court judgments, according to agency statistics, the Wall Street Journal reported. During the prior five years, from 2009 through 2013, the SEC collected on 60 percent of $14.6 billion. And in 2018, the commission collected just 28 percent of almost $4 billion. That rate — the lowest in a decade — was due in part to an unusual $1.7 billion settlement with the Brazilian oil company Petrobras that may never require payment to the SEC. The SEC has struggled for years to get defendants to pay more of their fines, although some are almost certain to avoid payment forever. That includes people who went to prison on related criminal charges, or people behind Ponzi schemes who spent the funds they took from defrauded investors.

The Securities and Exchange Commission voted 3-1 yesterday to advance a proposal that would exempt public companies with less than $100 million in annual revenue from regular outside audits, part of a broader effort to entice more companies to go public, the Wall Street Journal reported. Under the plan, smaller public companies such as those in the health care, information technology and biotech industries would get a pass from outside audits of their systems for preventing accounting errors and fraud, easing rules put in place nearly two decades ago in response to the Enron Corp. and WorldCom accounting frauds. SEC Chairman Jay Clayton has made it a priority to make it more attractive for companies to go public and framed yesterday’s proposal as a step toward that goal. It follows a move by the SEC last June to expand the number of companies that can make scaled-back disclosures to regulators that also was aimed at boosting interest in the public markets. “Many of these smaller companies—including biotech and health-care companies—will be able to redirect the savings into growing their companies by investing in research and human capital,” Clayton said.

The Securities and Exchange Commission is playing an increasingly important role in discussions of economic stability as the share of nonbank lending rises, the agency’s chairman, Jay Clayton, said yesterday, MorningConsult.com reported. The growth of collateralized loan obligations (CLOs), in particular, is one of the primary nonbank lending issues “on the table recently” for discussion, Clayton said. He said that the SEC is studying CLOs, single securities backed by a pool of debt, which often have a low credit rating. “Even if we conclude that the growth in CLOs is not something that poses a systemic risk, having those discussions among market regulators and banking regulators is a really big thing,” Clayton said. About two-thirds of CLOs are held by nonbank investors, according to the Financial Stability Board. Nonbanks such as mutual funds, hedge funds and asset managers are increasingly controlling debt marketplaces and lending. According to Federal Reserve research, this growth in lending among nonbanks came after post-financial crisis legislation requiring large banks to meet high standards for the amount and quality of capital on their balance sheets. The Financial Stability Board estimates that banks’ share of global financial assets had fallen to 39 percent in 2018 from 45 percent in 2008, while nonbank lending had grown to 31 percent from 26 percent in the same time period.

A top markets regulator said he was concerned about the growth of loans by banks to highly indebted companies, joining other policy makers who have highlighted risks that leveraged loans could pose to financial markets, the Wall Street Journal reported. Securities and Exchange Commission Chairman Jay Clayton on Monday said that in the leveraged-loans sector, he saw echoes of the period before the 2008 financial crisis when market expectations were “out of step with reality” and ultimately proved wrong. “To the extent that large concentrations of leveraged loans with long settlement cycles are in funds, that’s a case where liquidity expectations may be out of whack,” Clayton said. Lending by banks and other financial companies to highly indebted companies has grown in recent years, with the leveraged-loan business marking a bright spot for banks seeking to boost income during a period of low interest rates. In recent months, regulators at the Federal Reserve and Democrats in Congress have drawn attention to the systemic risks posed by the popularity of heavily leveraged loans.